PACRA Assigns Initial Entity Rating to D.G. Khan Cement Company Limited

Lahore, May 04, 2018 (PPI-OT): DG Khan Cement’s rating reflect company’s strong position in the cement industry emanating from its third highest market share in terms of capacity. The company’s two existing manufacturing units (Khairpur Site and DG Khan Site) are operating at full capacity. The profitability is fortified by cost-efficient operational framework translating in strong EBITDA margins. The company has planned commencement of its third manufacturing unit (Hub Site) in Jun-18 which will add capacity of 2.7mln tpa to the company’s existing capacity. This will assist the company in improving its market share amid industry wide capacity expansions going on.

In addition to this, the company is eyeing new export fronts and exploring new opportunities to channel exports in cost-efficient manner. The business profile of the company is strengthened by high capacity utilization, strong local demand, rebounding dispatches on exports front. Furthermore, the established dividend stream of the company from investments in Nishat Group companies continues to augment the bottom-line of the company. The company’s financial risk remains low mainly reflected from moderately leveraged capital structure and robust equity base. The rating derive benefit/comfort from (i) the company’s association with Nishat Group, (ii) strong local demand on the back of rising economic and infrastructure activity.

The ratings are dependent on upholding of the company’s business vis-a-vis financial risk profile. Any significant deterioration in the sector’s outlook particularly any unfavourable change in demand and expansion matrix, thereby exerting pressure on prices and margins, may negatively impact the ratings.

For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425